China News Agency, Hong Kong, June 9 (Reporter Zhang Xiaoxi) The Financial Secretary of the Hong Kong Special Administrative Region Chen Maobo said on the 9th that the spread of the new crown pneumonia epidemic has brought an unprecedented blow to the global aviation industry. In order to consolidate Hong Kong's position as an international aviation hub, And considering the long-term development of Hong Kong, the SAR Government decided to invest in Cathay Pacific Airways Group (Cathay Pacific) through a land fund, investing a total of 27.3 billion yuan (HK$, the same below).
On the same day, Chen Maobo met with the media on matters related to the investment of the SAR Government by Cathay Pacific. Chen Fan, Director of the Transport and Housing Bureau of the SAR Government, Xu Zhengyu, Secretary of the Financial Services and the Treasury Department, and Li Dazhi, Vice President of the Hong Kong Monetary Authority, attended the meeting.
Chen Maobo pointed out that under the new crown pneumonia epidemic, the global aviation industry has fallen into "icy", and Cathay Pacific, which accounts for 57% of passenger traffic and 41% of cargo traffic at Hong Kong International Airport, faces severe challenges in operations and finance. Among the more than 220 destinations in Hong Kong, 49 passenger and 14 cargo destinations are only served by Cathay Pacific. Many hotspots for Hong Kong people traveling and frequent direct flights are provided by Cathay Pacific. As a major service provider based in Hong Kong, the continuous and stable operation of Cathay Pacific is one of the elements to maintain the Hong Kong aviation network.
He also said that the aviation industry has a radiation effect on the overall economy. The aviation hub can not only drive business travelers, support the development of Hong Kong as an international financial center, but also support industries such as logistics, tourism and catering, and provide timely delivery of higher value-added consumer products such as fresh food and medicine. After a comprehensive evaluation, it was decided to invest in Cathay Pacific through a land fund, which on the one hand supports the development of Hong Kong's aviation hub, and at the same time it can also obtain a reasonable return on investment.
Chen Maobo revealed that the SAR government will invest 27.3 billion yuan for this investment. Seventy percent, or about 19.5 billion yuan, was used to subscribe for Cathay Pacific’s preferred stock, and the remaining approximately 7.8 billion yuan was a transitional loan; the estimated investment return rate is 4% to 7.5%, which is 3.7 percent higher than the average investment return rate of the Land Fund over the past six years. % Is high, which is in line with the goal of obtaining a reasonable return for investment in land funds.
He emphasized that this investment does not mean that the SAR government "dominates" Cathay Pacific. The SAR government does not intend to hold these shares in the long-term, nor will it participate in the group's daily operations. Cathay Pacific's operations are still the responsibility of its board of directors and management . But in order to protect the investment rights of the SAR government, he will appoint two observers to sit on its board of directors until Cathay Pacific repays all loans and pays off all interest, and redeems all preferred shares.
At noon on the same day, Cathay Pacific announced on the Hong Kong Stock Exchange that the group's board of directors recommended the implementation of a capital reorganization plan, with a total fund raising of about 39 billion yuan.
Cathay Pacific Group Chief Executive Officer Deng Jianrong stated that it was Cathay Pacific’s request for assistance from the SAR Government, as the Group’s passenger revenue this year has fallen to 1% of the same period last year, and monthly cash outflows from 2.5 billion to 3 billion yuan from February, even if it has been carried out Capital cuts are still insufficient for a number of measures to cut expenditures. He said he hoped that Cathay Pacific would return the loan and preferred equity to the SAR government as soon as possible. (Finish)